How to pay for a Minimum Income Guarantee

Footnotes

1 Scottish Government (2024) Scottish Budget 2025 to 2026: Barnett Block Grant funding

2 Scottish Government (2024) Scottish Budget 2025 to 2026

3 Scottish Government (2024) Scottish Budget 2025 to 2026

4 Scottish Government (2024) Building Safety Levy - Taxes - gov.scot

5 Office for Budget Responsibility (2024) Economic and Fiscal Outlook

6 Organisation for Economic Co-operation and Development (OECD) (2024) Revenue Statistics: Key findings for the United Kingdom

7 WPI Economics (2024) Economic Impact of a Minimum Income Guarantee: Analysis of economic theory and policy evidence

8 Institute for Fiscal Studies (2019) How do other countries raise more in tax than the UK?

9 Institute for Public Policy Research (2023) Fairer taxes, smarter spending: a recipe for sustainable growth and Resolution Foundation (2019) The shifting shape of UK tax

10 Institute for Fiscal Studies (2011) Tax by Design: final report of the Mirrlees Review

11 IPPR Tax-Benefit Model was used to model the revenue-raising estimates and distributional impacts. Full modelling results are presented in Annex I of the main report, with a modelling explanatory note included in Annex II.

12 The Scottish Income Tax, council tax and NICs scenarios account for any changes to social security spending as a result of the modelled tax changes.

13 This would be in addition to the increase in employer NICs announced at the 2024 Budget.

14 This includes the additional revenue from the first year of the council tax scenario as the indicative short term estimate of this proposed reform.

15 This includes the additional revenue from the third year of the council tax scenario as the indicative midpoint estimate of this proposed reform.

16 This includes the additional revenue from the fifth, final year of the council tax scenario as the indicative longer term estimate of this proposed reform.

17 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

18 Institute for Fiscal Studies (2019) How do other countries raise more in tax than the UK?

19 WPI Economics (2024) Economic Impact of a Minimum Income Guarantee: Analysis of economic theory and policy evidence

20 Scottish Government (2024) Scottish Budget 2025 to 2026: Barnett Block Grant funding

21 Scottish Government (2024) Scottish Budget; 2025-26

22 Scottish Government (2024) Scottish Budget; 2025-26

23 Scottish Government (2024) Land and Buildings Transaction Tax (LBTT) - Taxes

24 Scottish Government (2023) Scottish Landfill Tax - Taxes

25 Scottish Government (2024) Council Tax - Local government

26 Scottish Government (2018) Non-domestic rates (business rates) - Local government

27 Scottish Government - A tax on commercial exploitation of crushed rock, gravel and sand - Aggregates Levy - Taxes

28 Scottish Government Air Departure Tax - Taxes

29 Scottish Government VAT (value added tax) - Taxes

30 Scottish Fiscal Commission (2025) Scotland’s Economic and Fiscal Forecasts

31 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

32 Local councils can introduce the levy after an 18 month consultation period with local businesses and their local community. There is flexibility within the legislation, allowing the levy to be applied to a specific geographical area, or applied seasonally. See: Visitor Levy (Scotland) Act 2024

33 Edinburgh City Council (2025) Edinburgh declares Scotland's first visitor levy

34 Scottish Government (2024) Cruise ship levy - Taxes

35 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

36 Reform Scotland (2022) Taxing Times: Why Scotland needs new, more and better taxes

37 Scottish Government (2024) Building Safety Levy - Taxes

38 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

39 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

40 Office for Budget Responsibility (2024) Economic and Fiscal Outlook

41 Office for Budget Responsibility (2024) Economic and Fiscal Outlook

42 Institute for Public Policy Research (2023) Fairer taxes, smarter spending: a recipe for sustainable growth

43 OECD (2024) Revenue Statistics 2024 – United Kingdom

44 The western European countries that are Member States of the EU.

45 Office for Budget Responsibility (2024) Economic and Fiscal Outlook

46 WPI Economics (2024) Economic Impact of a Minimum Income Guarantee: Analysis of economic theory and policy evidence

47 OECD (2024) Revenue Statistics 2024 – France

48 As we are using OECD Revenue Statistics for this comparative analysis, Malta is excluded from this as they are not an OECD member.

49 IFS (2019) How do other countries raise more in tax than the UK?

50 OECD (2024) Revenue Statistics 2024 - United Kingdom

51 Resolution Foundation (2019) The shifting shape of UK tax

52 Institute for Public Policy Research (2023) Fairer taxes, smarter spending: a recipe for sustainable growth

53 IFS (2011) Tax by Design: final report of the Mirrlees Review

54 IFS (2013) Taxing an independent Scotland

55 Reform Scotland (2022) Taxing Times: Why Scotland needs new, more and better taxes

56 IPPR Scotland (2023) The case for fair tax reform in Scotland

57 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

58 IFS (2024) The increases in Scotland’s top rate of income tax may have reduced revenues – although significant uncertainty remains [Comment]

59 IFS (2025) Assessing Scottish tax strategy and policy

60 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

61 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

62 IPPR Scotland (2023) The case for fair tax reform in Scotland

63 Scottish Government (2024) Scottish Budget 2025 to 2026: Scottish tax ready reckoners

64 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

65 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

66 IPPR Scotland (2023) The case for fair tax reform in Scotland

67 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

68 Fraser of Allander Institute (2023) Scotland’s Budget Report 2023

69 IFS (2021) The Scottish Government’s record on tax and benefit policy

70 Scottish Government (2024) Scottish Budget 2025 to 2026: Scottish tax ready reckoners

71 IFS (2013) Taxing an independent Scotland

72 Poverty and Inequality Commission (2023) How better tax policy can reduce poverty and inequality: Recommendations for an effective and accountable Scotland

73 OBR (2024) Tax by tax, spend by spend: NICs

74 IFS (2013) Taxing an independent Scotland

75 IPPR Scotland (2023) The case for fair tax reform in Scotland

76 Scottish Government (2024) Council Tax Collection Statistics, 2023-24

77 Scottish Local Tax Commission (2015) Just Change final report

78 Scottish Local Tax Commission (2015) Scottish Local Tax Commission - Just Change - Final Report

79 IPPR Scotland (2023) The case for fair tax reform in Scotland

80 The consultation proposed a repeat of changes made in 2017, which would increase council tax by 7.5%, 12.5%, 17.5% and 22.5% for properties in Bands E, F, G and H respectively if the rates for Band D properties remained unchanged. See: Scottish Government (2023) Fairer Council Tax: consultation

81 Scottish Government (2025) Building consensus on Council Tax reform

82 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

83 As of April 2024 local authorities can apply a 50% discount or charge an increase of up to 100% on the standard rate for second homes. For unoccupied homes, local authorities were given the discretion to offer a 10-50% discount for homes that are unoccupied for six to12 months and a grace period of six months if a new owner is carrying out renovations. After 12 months, local authorities can then charge an increase of up to 100% on the standard rate for unoccupied homes.

84 Welsh Government (2023) Council Tax on empty and second homes

85 Scottish Local Tax Commission (2015) Scottish Local Tax Commission - Just Change - Final Report

86 The Welsh Government has previously consulted on introducing additional bands as part of any revaluation in Wales. See: Welsh Government (2022) A Fairer Council Tax consultation document

87 IFS (2025) Scottish council tax: ripe for reform

88 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

89 IPPR Scotland (2021) Better than before: How local tax reform can help pay for recovery

90 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

91 IPPR Scotland (2021) Better than before: How local tax reform can help pay for recovery

92 Scottish Government (2023) Fairer Council Tax: consultation

93 From increases of 3% (plus inflation) for properties in Bands A-D and of 4%, 5%, 7.5% and 10% (plus inflation) for Bands E, F, G and H respectively each year of the parliament starting in 2022/23. This would have raised an additional £380m per year by 2025/26. See: IPPR Scotland (2021) Better than before: How local tax reform can help pay for recovery

94 Scottish Fiscal Commission (2025) Scotland’s Economic and Fiscal Forecasts

95 Scottish Government (2024) Non-domestic rates relief

96 Scottish Government (2024) Scottish Budget; 2025-26

97 Scottish Government (2024) Government Expenditure & Revenue Scotland 2023-24

98 House of Commons Library (2024) Taxation of North Sea oil and gas

99 Scottish Government (2024) Scottish Budget 2025 to 2026: Scottish tax ready reckoners

100 IPPR Scotland (2023) The case for fair tax reform in Scotland

101 Scottish Government (2024) Non-domestic rates income statistics

102 Scottish Government (2024) Non-domestic rates income statistics

103 Fraser of Allander Institute (2022) Small Business Bonus Scheme: evaluation

104 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

105 Reform Scotland (2019) Growing Up: A Corporation Tax for Scotland

106 Scottish Government (2024) Government Expenditure & Revenue Scotland 2023-24

107 Office for Budget Responsibility (2023) The evolution of North Sea oil and gas receipts

108 IFS (2021) The Scottish Government’s record on tax and benefit policy

109 Scottish Fiscal Commission (2025) Scotland’s Economic and Fiscal Forecasts

110 Scottish Government (2024) Scottish Budget; 2025-26

111 A relief for first-time buyers is available, which increases the residential nil rate band of LBTT to £175,000.

112 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

113 HMRC (2024) Changes to the rates of Capital Gains Tax

114 Scottish Government (2024) Scottish Budget 2025 to 2026: Scottish tax ready reckoners

115 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

116 IPPR Scotland (2023) The case for fair tax reform in Scotland

117 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

118 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

119 University of Greenwich (2021) The case for a progressive annual wealth tax in the UK

120 Reform Scotland (2022) Taxing Times: Why Scotland needs new, more and better taxes

121 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

122 The UK’s indirect taxes include VAT, fuel, tobacco, alcohol, vehicle, air passenger and customs duties; as well as insurance premium, landfill tax, land and building (stamp duty), betting and gambling taxes; and aggregates, environmental and climate change levies.

123 OBR (2024) Tax by tax, spend by spend: VAT

124 This is proposed to be the first 10 percentage points of the standard rate of VAT and the first 2.5 percentage points of the reduced rate of VAT.

125 Scottish Government (2024) Government Expenditure & Revenue Scotland 2023-24

126 IFS (2011) Tax by Design: final report of the Mirrlees Review

127 Reform Scotland (2022) Taxing Times: Why Scotland needs new, more and better taxes

128 Tax Foundation (2024) International Tax Competitiveness Index 2024

129 IFS (2020) Don’t waste a good crisis: reform taxes to make tax rises less painful [Comment]

130 Reform Scotland (2022) Taxing Times: Why Scotland needs new, more and better taxes

131 Office of Tax Simplification (2017) Value added tax: routes to simplification

132 HMRC (2024) Tax gaps: VAT

133 IFS (2013) Taxing an independent Scotland

134 Scottish Fiscal Commission (2025) Scotland’s Economic and Fiscal Forecasts

135 Scottish Parliament (2024) Aggregates Tax and Devolved Taxes Administration (Scotland) Act 2024

136 Scottish Government (2023) Aggregates Levy - Taxes

137 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

138 Scottish Parliament (2024) Visitor Levy (Scotland) Act 2024

139 Scottish Government (2024) Cruise ship levy - Taxes

140 Fraser of Allander Institute (2023) Scotland’s Budget Report 2023

141 Social Market Foundation (2024) Upcoming fuel duty freeze will cost government over £20 billion and do nothing to alleviate poverty [Commentary]

142 IFS (2013) Taxing an independent Scotland

143 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

144 Scottish Government (2024) Scottish Budget; 2025-26

145 Institute for Government (2021) Net zero and the tax system

146 European Parliamentary Research Service (2024) Shaping choices: Behavioural taxation in the EU

147 This scenario also incorporates the increase in employer NICs announced at the 2024 Budget.

148 Behavioural changes broadly fall into three categories. The first is i ntensive margin tax behaviour, which includes taxpayers working fewer hours, changing their efforts to earn more money or engaging in tax avoidance scheme. The second is extensive margin tax behaviour, which includes changing whether taxpayers enter or exist in the labour market, or where they live for tax purposes. The third is forestalling, where taxpayers have the opportunity to change when they receive their income in response to tax changes. For more details see: Scottish Parliament Information Centre (2023) Behavioural responses to changes in Income tax

149 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

150 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

151 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

152 IPPR Scotland (2023) The case for fair tax reform in Scotland

153 Scottish Government (2024) Scottish Income Tax 2025 to 2026: factsheet

154 IFS (2019) How do other countries raise more in tax than the UK?

155 IFS (2024) The increases in Scotland’s top rate of income tax may have reduced revenues – although significant uncertainty remains [Comment]

156 HMRC (2024) Impacts of 2018 to 2019 Scottish Income Tax changes on intra-UK migration and labour market participation

157 Fraser of Allander Institute (2023) Scotland’s Budget Report 2023

158 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

159 NIESR (2024) Which taxes are best and worse for growth?

160 AICPA & CIMA (2023) Productivity Lessons Learnt from the World – Tax and Productivity

161 Scottish Government (2025) Building consensus on Council Tax reform

162 Scottish Government (2024) Fairer Council tax: consultation analysis

163 For the purposes of this analysis, we have modelled revenues over a five-year period running from 2024-25 to 2028-29. More details on the council tax modelling decisions can be found in Annex II.

164 IPPR Scotland (2023) The case for fair tax reform in Scotland

165 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

166 IFS (2011) Tax by Design: final report of the Mirrlees Review

167 Landman Economics for STUC (2023) Raising taxes to deliver for Scotland

168 IFS (2013) Taxing an independent Scotland

169 IFS (2011) Tax by Design: final report of the Mirrlees Review

170 IFS (2025) Scottish council tax: ripe for reform

171 Scottish Government (2024) Private rented sector - rent increase frequency: equality impact assessment

172 IFS (2024) The government’s record on tax 2010–24

173 Scottish Government (2024) Scottish Income Tax 2025 to 2026: factsheet

174 The New Economic Foundation (2019) Nothing Personal: Replacing the personal tax allowance with a Weekly National Allowance

175 IFS (2012) A £10,000 personal allowance: who would benefit, and would it boost the economy? [Comment]

176 IFS (2013) Taxing an independent Scotland

177 IFS (2019) How do other countries raise more in tax than the UK?

178 Poverty and Inequality Commission (2023) How better tax policy can reduce poverty and inequality: Recommendations for an effective and accountable Scotland

179 Poverty and Inequality Commission (2023) How better tax policy can reduce poverty and inequality: Recommendations for an effective and accountable Scotland

180 IFS (2022) Top income inequality and tax policy

181 Martin Jacob (2021) Dividend taxes, employment, and firm productivity, Journal of Corporate Finance

182 Adrien Matray and Charles Boissel (2020) Higher Dividend Taxes, No Problem! Evidence from Taxing Entrepreneurs in France, Griswold Center for Economic Policy Studies Working Paper

183 Poverty and Inequality Commission (2023) How better tax policy can reduce poverty and inequality: Recommendations for an effective and accountable Scotland

184 IFS (2019) How do other countries raise more in tax than the UK?

185 IFS (2013) Taxing an independent Scotland

186 IFS (2024) Autumn Budget 2024: IFS analysis

187 Oxford University Centre for Business Taxation (2024) Will Workers Pay The Employer National Insurance Contributions Rise?

188 Stuart Adam et al. (2019) 35 years of reforms: A panel analysis of the incidence of, and employee and employer responses to, social security contributions in the UK, Journal of Public Economics

189 Bank of England (2025) Reading between the lines − speech by Sarah Breeden

190 Oxford University Centre for Business Taxation (2024) Will Workers Pay The Employer National Insurance Contributions Rise?

191 Youssef Benzarti and Jarkko Harju (2021) Using Payroll Tax Variation to Unpack the Black Box of Firm-Level Production, VATT Institute for Economic Research Working Papers

192 House of Commons Library (2024) Tax statistics: an overview

193 Reform Scotland (2022) Taxing Times: Why Scotland needs new, more and better taxes

194 IFS (2019) How do other countries raise more in tax than the UK?

195 Scottish Parliament Finance and Public Administration Committee (2023) Scottish Fiscal Framework: Value Added Tax Assignment

196 HM Treasury and Office of the Secretary of State for Scotland (2023) The updated agreement on the Scottish Government’s Fiscal Framework

197 Scottish Parliament Finance and Public Administration Committee (2023) Scottish Fiscal Framework: Value Added Tax Assignment

198 Reform Scotland (2022) Taxing Times: Why Scotland needs new, more and better taxes

199 IFS (2017) Redistribution, efficiency and the design of VAT: a review of the theory and literature

200 IFS (2019) The effect of taxes and benefits on UK inequality

201 IFS (2020) Don’t waste a good crisis: reform taxes to make tax rises less painful [Comment]

202 IFS (2011) Tax by Design: final report of the Mirrlees Review

203 The Office for Budget Responsibility forecast when the standard rate of VAT was raised from 17.5% to 20% in 2010 that, in the short term, retailers would pass on two thirds of the VAT increase relatively quickly, with further adjustments the next year. See: Office for Budget Responsibility (2010) Budget forecast

204 Office for Budget Responsibility (2010) Budget forecast

205 IFS (2011) Tax by Design: final report of the Mirrlees Review

206 Cross-border flows on physical purchases would be limited because the border area is not densely populated in Scotland. However, customers could travel to the UK for purchases they feel warrant the relative saving, for example large items or bulk purchases. See: IFS (2013) Taxing an independent Scotland

207 Hana Zídková (2014) Determinants of VAT gap in EU, Prague Economic Papers

208 Any retailer outside Scotland selling goods in the Scottish market would need to register for VAT in Scotland, including online retailers. Goods purchased from foreign markets would be charged VAT on imports.

209 IFS (2011) Tax by Design: final report of the Mirrlees Review

210 James Alm & Asmaa El-Ganainy (2012) Value-added taxation and consumption, International Tax and Public Finance

211 Jean Acheson et al. (2018) VAT revenue elasticities: An analytical approach, ESRI Working Paper

212 House of Commons Library (2013) VAT: the new 20% standard rate

213 IFS (2020) How can taxes be designed to discourage socially harmful behaviour?

214 Ralph C. Gamble et al. (2011) Excise Taxes and the Stability of Price Elasticity, Journal of Applied Business and Economics

215 IFS (2016) The IFS Green Budget, Chapter 9: Excise duties

216 The King’s Fund (2020) What role do taxes and regulation play in promoting better health?

217 Scottish Government (2024): Government Expenditure & Revenue Scotland 2023-24

218 Using the IPPR Tax Benefit Model which includes duties on petrol and diesel; cigarettes and hand rolling tobacco; spirits, wine, beer and cider.

219 Reform Scotland (2022) Taxing Times: Why Scotland needs new, more and better taxes

220 Jonathan Gruber and Botond Kőszegi (2004), Tax incidence when individuals are time-inconsistent: the case of cigarette excise taxes, Journal of Public Economics

221 National Centre for Social Research for the Department for Transport (2024) Car Ownership: Evidence Review and Blessing Nyakutsikwa et al. (2021) The effect of tobacco and alcohol consumption on poverty in the UK, Addiction

222 IFS (2011) Tax by Design: final report of the Mirrlees Review

223 Tomas Havranek et al. (2012) Demand for gasoline is more price-inelastic than commonly thought, Energy Economics

224 Robert Pryce et al. (2024) Estimation of integrated price elasticities for alcohol and tobacco in the United Kingdom using the living costs and food survey 2006–2017, Drug and Alcohol Review

225 IFS (2013) Price-based measures to reduce alcohol consumption

226 Kanbar and Keen (1993) Jeux Sans Frontières: Tax Competition and Tax Coordination When Countries Differ in Size, The American Economic Review

227 IFS (2013) Taxing an independent Scotland

228 Scotland’s Census (2023) Scotland’s Census 2022 – Rounded population estimates

229 Public Health Scotland (2023) Evaluating the impact of minimum unit pricing for alcohol in Scotland: A synthesis of the evidence

230 This includes the additional revenue from the first year of the council tax scenario as the indicative short term estimate of this proposed reform.

231 This includes the additional revenue from the third year of the council tax scenario as the indicative midpoint estimate of this proposed reform.

232 This includes the additional revenue from the fifth, final year of the council tax scenario as the indicative longer term estimate of this proposed reform.

233 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

234 IFS (2019) How do other countries raise more in tax than the UK?

235 Scottish Government (2024) Scotland’s Tax Strategy: Building on our Tax Principles

236 The Scottish Income Tax, council tax and NICs scenarios account for any changes to social security spending as a result of the modelled tax changes.

237 This would be in addition to the increase in employer NICs announced at the 2024 Budget.